Looking for nuggets in the dot-com gold rush

The continued volatility afflicting technology stocks - which forced the London Techmark down another 7.8 per cent last Friday - is leaving casualties in its wake.

From the beautiful people at boo.com to the daytraders having their fingers burnt at the first time of asking, the market is clearly biting back.

Whether either group deserve much sympathy is debatable. More worrying is the affect a stock slide is having on the innovators within the industry. Good ideas need money to make them real. When the market is buoyant and shares are rising, there is no shortage of cash to fund the next big thing.

When the market is in retreat, cash goes back into corporate wallets, deals don't get done and rivals don't get bought. The result is stagnation.

Witness Yes TV's abandoned IPO and United Pan-Europe Communications' (UPC) terminated acquisition of SBS. Two companies at the heart of convergence of telecommunications, cable TV and Internet access stopped in their tracks.

This is a dangerous cycle. Somebody needs to take some brave decisions to keep the high-tech bandwagon rolling on. Perhaps they should take a leaf out of Deutsche Telekom's book.

Widely characterised as a former monopoly player lacking entrepreneurial flair, DT has been one of the few companies to successfully take on the market in these worrying times. Its flotation of T-Online in April was reward for having faith in the service, setting realistic expectations with a realistic valuation and, above all, keeping its nerve.

Others would do well to follow suit.